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An offshore conversation part 2: CIO won't outsource this...

When it comes to offshore outsourcing, CIO Vivek Asija has "been there" and is "doing that." He discusses the benefits and obstacles with

What service would you never send offshore and why?

Vivek Asija
It depends on how large your organization is, but for mid-market companies, I would never outsource our help desk, user interface and design or even customer service. I would also hesitate to send quality assurance (QA). That's probably where we failed. Although we were responsible for testing, they [Tata] helped us by sharing their internal test and QA plans. We're a midsized company and don't have the resources to do QA ourselves. But, in reality, you should allocate a separate team to do QA or do it yourself. The same team doing the custom development work shouldn't also be the same team doing the QA. This is where domain expertise comes in. Things have to make sense. If the end user doesn't like the software, it won't fly. You should have a very well-defined test plan managed by domain experts. If you're talking about hundreds of people on a project, you can do part of the QA, such as unit testing, in India. In all cases, however, you must have people who understand the way people actually work in your business in charge of testing. How do you manage your offshore presence? Do you manage it in-house or do you involve a third party?
I managed it in-house. It was a lot of extra work for me. However, I believe the reason the project was so successful was because a senior leader had intense oversight of it. I was very hands-on. I was extremely involved in the requirements analysis, user interviews, ongoing check-ins, and so on. I had my PL call me two times a week and send me written updates once a week. One big recommendation for project success is to start small and make the vendor prove themselves to you and really show that they understand your domain and needs. I'd recommend doing a pilot project first. We paid for the pilot and told [Tata] if they did it well, we would give them the rest of the contract for the entire system. But first, they had to produce one of 10 modules as a working, stand-alone application. We actually wrote up the contract this way, including the pilot signoff and promise of the remaining modules. Has your company created programs to assist the employees whose positions are outsourced, i.e., putting them in different positions?
It's not a sinister plot to put Americans out of work. American companies are doing what they've always done -- trying to get the best products and services for the least amount of money.
Vivek Asija
CIOMcGuire Real Estate
This doesn't really apply to us. We didn't eliminate any positions as a result of offshore outsourcing. We rely on our staff; they make us special. Our technology vendors are our partners. For us, hiring this vendor was no different from hiring a U.S. vendor. They basically offered us expertise we didn't have in-house. I look at it as 'what has my staff gained by interacting with these people?' They gained knowledge and expertise. Tata actually became an augmentation to our team. Have you saved money by offshore outsourcing? Can you quantify how much?
Yes, we saved a lot. The same implementation would've cost us 70% to 75% more using U.S. vendors. I did price it out, and the same project with a U.S. vendor would've cost us more and offered us less functionality. How have you reinvested your cost savings into the American economy? How will those cost savings create better more innovative jobs as some analysts predict?
As a mid-sized business, we've become more efficient and competitive as a result of offshore outsourcing. We would not have been able to afford to buy and implement this system without the option of offshore outsourcing. As a result, our organization and systems are now smarter, better and faster. This experience also made us more competitive. We now have systems comparable to those of much bigger real estate companies. Additionally, MISSILE, our intranet and -- our public Web site --set the table for our future growth and expansion, which we hope lead to the firm's continued prosperity and more jobs.

As for improving the U.S. economy, we're currently working with the U.S.-based offices of Tata on the maintenance portion of our project. By spending money at this U.S.-based office, we're indirectly investing in a local U.S. economy. Their employees purchase U.S. goods, homes. ….

Finally -- I'm investing in my staff by exposing them to deeper skill sets, more sophisticated projects, software best practices and a global way of doing business.

Where do you think blame for the offshoring of U.S. jobs lies? In the educational system? In Americans' demand for the best quality for the lowest price? Some people would say it lies in the avarice of American corporations. How would you respond to that?
For more information

Are you following Gartner's 10 steps to mastering outsourcing?

One CEO said taking work abroad was a big mistake he won't make again.

Many U.S. execs think most jobs should be kept stateside.

I think American firms can do more for their employees. They should provide more support and try to place outsourced employees within new jobs in their firms or try to offer additional training options.

However, I think the word 'blame' personalizes what is happening too much. We're talking about global economic trends. It's not a sinister plot to put Americans out of work. American companies are doing what they've always done -- trying to get the best products and services for the least amount of money. All industries do that. The manufacturing industry has done it for years. It's just now starting to hit the service sector, which is why it's getting people nervous. But, ultimately, it's just about an old-fashioned need to save money, though now in a global economy.

It's a faceless phenomenon driven by economics. We're not talking sweatshops here or putting children who should be in school to work. That's not right, and companies need to operate morally. But I see this as an economic mega trend that is global in nature.

Click here to read the first half of the interview.

This column also appears in neoIT's monthly services globalization newsletter Offshore Insights.

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